| Keyspan Generation, LLC v Nassau County |
| 2014 NY Slip Op 04737 [118 AD3d 949] |
| June 25, 2014 |
| Appellate Division, Second Department |
[*1]
| Keyspan Generation, LLC, et al.,Respondents, v Nassau County et al., Appellants. (Action No. 1.) Long IslandLighting Company, Respondent, v Board of Assessors et al., Appellants. (Action No.2.) |
Rivkin Radler LLP, Uniondale, N.Y. (William M. Savino, Stephen J. Smirti, Jr., M.Paul Gorfinkel, and Frank Misiti of counsel), and Carnell T. Foskey, County Attorney,Mineola, N.Y. (Lisa LoCurto of counsel), for appellants (one brief filed).
Cullen and Dykman LLP, Garden City, N.Y. (Karen I. Levin, Jennifer A.McLaughlin, and Hayley M. Kelch of counsel), for respondents.
Motion by the respondents, inter alia, for leave to reargue appeals from two orders ofthe Supreme Court, Nassau County, entered October 24, 2011, and June 7, 2012,respectively, which were determined by a decision and order of this Court dated March19, 2014. Separate motion by the appellants for leave to reargue the appeals or for leaveto appeal to the Court of Appeals from the decision and order of this Court dated March19, 2014.
Upon the papers filed in support of the motions and the papers filed in oppositionthereto, it is,
Ordered that the branch of the respondents' motion which is for leave to reargue isgranted, and the motion is otherwise denied; and it is further,
Ordered that the appellants' motion is denied; and it is further,
Ordered that, upon reargument, the decision and order of this Court dated March 19,2014 (Keyspan Generation,LLC v Nassau County, 115 AD3d 812 [2014]), is recalled and vacated, and thefollowing decision and order is substituted therefor:
In two related actions, inter alia, for judgments declaring that the defendants'application of Real Property Tax Law article 18 in imposing special ad valorem leviesupon real [*2]property situated within noncountywidespecial districts located in Nassau County during certain tax years is illegal and void, thedefendants appeal (1), as limited by their brief, from so much of an order of the SupremeCourt, Nassau County (Woodard, J.), entered October 24, 2011, as denied their motionpursuant to CPLR 3211 (a) to dismiss the complaint in action No. 1, and granted thosebranches of the plaintiffs' cross motion in action No. 2 which were for summaryjudgment declaring that the defendants' application of Real Property Tax Law article 18in imposing special ad valorem levies upon real property situated within noncountywidespecial districts located in Nassau County during tax years 1998 to 2001 is illegal andvoid and that the defendants are liable for refunds, if any, due to the plaintiffs, and toimpose sanctions against the defendants, and directed a hearing on the amount of anysuch refunds and sanctions, and (2) from an order of the same court entered June 7, 2012,which, in effect, granted those branches of the plaintiffs' cross motion in action No. 1which were for summary judgment declaring that the defendants' application of RealProperty Tax Law article 18 in imposing the taxes at issue in that action is illegal andvoid and that the defendants are liable for any refunds due to the plaintiffs.
Ordered that on the Court's own motion, the notice of appeal from so much of theorder entered October 24, 2011, as directed a hearing on the amount of any refunds andsanctions that might be due to the plaintiffs is deemed to be an application for leave toappeal from that portion of the order, and leave to appeal is granted (see CPLR5701 [c]); and it is further,
Ordered that the order entered October 24, 2011, is modified, on the facts and in theexercise of discretion, (1) by deleting the provision thereof granting that branch of theplaintiffs' cross motion in action No. 2 which was to impose sanctions against the defendants, and substitutingtherefor a provision denying that branch of the cross motion, and (2) by deleting theprovision thereof directing a hearing on the amount of sanctions that might be due to theplaintiffs; as so modified, the order entered October 24, 2011, is affirmed insofar asappealed from; and it is further,
Ordered that the order entered June 7, 2012, is affirmed; and it is further,
Ordered that the matter is remitted to the Supreme Court, Nassau County, for furtherproceedings, including the entry of judgments, inter alia, declaring that the defendants'application of Real Property Tax Law article 18 in imposing special ad valorem leviesupon real property situated within noncountywide special districts located in NassauCounty during the subject tax years is illegal and void; and it is further,
Ordered that one bill of costs is awarded to the plaintiffs.
These appeals concern certain real property situated in Nassau County and owned bythe plaintiffs or their successors in interest. In 1997, Long Island Lighting Company(hereinafter LILCO) commenced an action challenging the legality of the application ofReal Property Tax Law article 18 with respect to the imposition of special ad valoremlevies upon real property situated within all noncountywide special districts duringcertain tax years (hereinafter action No. 2). In action No. 2, LILCO asserted that thedefendants' assessment of LILCO's real property located within noncountywide specialdistricts at different uniform percentages of value for each property classification, and thedefendants' imposition of noncountywide special district taxes on the basis of suchassessments, is illegal and void pursuant to Real Property Tax Law article 18. In 1999,KeySpan Generation, LLC, KeySpan Corporate Services, LLC, and KeySpan Gas EastCorporation, doing business as Brooklyn Union of Long Island (hereinafter collectivelythe KeySpan plaintiffs), commenced an action seeking similar relief (hereinafter actionNo. 1). The KeySpan plaintiffs later acquired portions of LILCO's property andoperations (see Matter of Town of Islip v Long Is. Power Auth., 301 AD2d 1, 4-6[2002]) and, with it, the right to prosecute action No. 2. The two actions were bothasserted against the County of Nassau and various ancillary bodies of the County(hereinafter collectively the County defendants), and the actions were joined for trial. Inthe complaints, both LILCO and the KeySpan plaintiffs (hereinafter collectively theplaintiffs) sought declarations that the County defendants' application of RPTL article 18in imposing special ad valorem levies upon real property situated within noncountywidespecial districts located in Nassau County during certain tax years is illegal and void andthat, pursuant to former Nassau County Administrative Code (hereinafter NCAC)§ 6-26.0 (b) (3) (c), which is popularly known as "the County Guaranty,"they were entitled to refunds of the taxes they paid in connection with the levies on theirproperty. The County Guaranty provided that "[n]otwithstanding any provisions of thischapter, or any other general or special law to the contrary, any deficiency existing orhereafter arising from a decrease in an assessment or tax under subdivisions one, fourand seven of section 6-24.0, or sections 6-12.0 or 5-72.0 of the code or by reason ofexemption or reductions of assessments shall be a county charge" (former NCAC§ 6-26.0 [b] [3] [c]).
Meanwhile, in 1997, nonparties New York Telephone Company, New York WaterService Corporation, and Long Island Water Corporation commenced separateproceedings against the County of Nassau, alleging that the County's method of assessingreal property situated within noncountywide special districts during certain tax yearsviolated RPTL article 18. In 2002, this Court, in connection with those proceedings,among other things, affirmed so much of an order of the Supreme Court, Nassau County,as "determined that Nassau County's method of assessing real property innon-Countywide special districts during the tax years in question violated the relevantprovisions of the Real Property Tax Law" (New York Tel. Co. v Nassau County,297 AD2d 663, 665 [2002], revd on other grounds 1 NY3d 485 [2004]).
In 2009, the County defendants moved pursuant to CPLR 3211 (a) (7) to dismiss thecomplaint in action No. 1. The County defendants argued that refunds of special advalorem taxes did not fall within the scope of the County Guaranty. The Countydefendants further contended that, even if the County Guaranty did apply, pursuant toMatter of Hellerstein v Assessor of Town of Islip (37 NY2d 1 [1975]) and itsprogeny, the Supreme Court should decline to award the plaintiffs the refunds theysought on the ground that to do so would result in "fiscal chaos" due to the Countydefendants' dire financial distress. The plaintiffs cross-moved for summary judgment inboth actions declaring that the County defendants' application of RPTL article 18 inimposing special ad valorem levies on real property situated within all noncountywidespecial districts in Nassau County during tax years 1998 through 2001 was illegal andvoid, and awarding them refunds as well as sanctions on the ground that the Countydefendants' arguments in support of their motion were frivolous.
In an order entered October 24, 2011, the Supreme Court, inter alia, denied theCounty defendants' motion to dismiss the complaint in action No. 1, and granted thosebranches of the plaintiffs' cross motion which were for summary judgment in action No.2 declaring that the application of RPTL article 18 to the subject real property is illegaland void and that the County defendants were liable for any refunds, and for an award ofsanctions. In that order, the Supreme Court relied, in part, upon this Court's decision andorder in New York Tel. Co. v Nassau County (297 AD2d 663 [2002]). In anorder entered June 7, 2012, the Supreme Court, in effect, granted those branches of theplaintiffs' cross motion which were for summary judgment in action No. 1 declaring thatthe application of RPTL article 18 to the subject real property is illegal and void and thatthe County defendants were liable for any refunds.
Although the County defendants contend that the language of the County Guarantydoes not encompass refunds of special ad valorem taxes, in New York Tel. Co. v Supervisor ofTown of N. Hempstead (77 AD3d 121 [2010]), this Court stated that thequestion before us was "whether Nassau County Administrative Code§ 6-26.0 (b) (3) (c) (L 1939, chs 272, 701-709, as amended), known as the'County Guaranty,' requires the County of Nassau . . . rather than the Townof North Hempstead and several special districts located in the Town, to refund certainspecial ad valorem levies judicially determined to be invalidly imposed upon theplaintiff's real property" (id. at 122). In that case, we stated, without qualification,that "[w]e conclude that the 'County Guaranty' applies to the judicially directed refundsof the subject levies" (id. at 123).
The County defendants argue that even if the County Guaranty applies to the refundssought by the plaintiffs, "fiscal chaos" would result if the County defendants were heldliable for refunds in this and similar actions and, thus, the plaintiffs should be affordedonly prospective relief, not retroactive refunds. We disagree.
In Matter of Hellerstein v Assessor of Town of Islip (37 NY2d at 3), ataxpayer [*3]commenced an action challenging themethod by which property in the Town of Islip was assessed, contending that it violatedRPTL 306. The Court of Appeals agreed that the method of taxation, althoughwidespread and of longstanding practice, was contrary to statute (see id. at 9-10).However, in part because the plaintiff sought only prospective relief, the Court did notorder retroactive refunds of property taxes (see id. at 13-14). In so doing, theCourt stated that "the courts should not act 'so as to cause disorder and confusion inpublic affairs even though there may be a strict legal right' " (id. at 13-14,quoting Matter of Andresen v Rice, 277 NY 271, 282 [1938]). The Courtexplained that "it is incumbent on the courts, where their discretion is involved, toexercise the same degree of restraint whenever a settled assessment roll or property rightsbased thereon are challenged for illegality" (Matter of Hellerstein v Assessor of Townof Islip, 37 NY2d at 14; see Foss v City of Rochester, 65 NY2d 247, 260[1985] [invalidating a local law and its application of RPTL article 18, but declining toapply the invalidation retroactively since the defendant city had relied upon revenuescollected under those provisions]).
Contrary to the County defendants' argument, Matter of Hellerstein andFoss do not stand for the proposition that whenever the award of damages orrefunds against a municipality will result in financial hardship, a court may decline toaward the relief to which the plaintiff is otherwise entitled. Instead, these cases stand forthe more limited proposition that, where a municipality has reasonably relied upon awidespread and longstanding practice (as in Matter of Hellerstein) or a statute islater invalidated (as in Foss), and where applying the invalidation retroactivelywould call into question "a settled assessment roll or property rights based thereon," acourt may exercise its discretion by giving its holding only prospective application(Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d at 14; seeGandolfi v City of Yonkers, 101 AD2d 188, 197-198 [1984], affd 62 NY2d995 [1984]; Hurd v City of Buffalo, 41 AD2d 402, 406 [1973], affd 34NY2d 628 [1974]). Here, the County defendants' submissions have not demonstrated thatawarding the plaintiffs the refunds they seek would call into question settled assessmentrolls or property rights based thereon.
For the foregoing reasons, the Supreme Court properly denied the Countydefendants' motion to dismiss the complaint in action No. 1 for failure to state a cause ofaction (see CPLR 3211 [a] [7]). Moreover, in opposition to the plaintiffs' primafacie showing of entitlement to judgment as a matter of law in connection with bothactions, the County defendants failed to raise a triable issue of fact (see generallyAlvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). Accordingly, the SupremeCourt properly granted those branches of the plaintiffs' cross motion which were forsummary judgment for the declaratory relief requested and for an award of refunds inboth actions.
Pursuant to 22 NYCRR 130-1.1, sanctions may be imposed against a party or theparty's attorney for frivolous conduct (see 22 NYCRR 130-1.1 [b]). "Conductduring litigation, including on an appeal, is frivolous and subject to sanction and/or theaward of costs when it is completely without merit in law or fact and cannot be supportedby a reasonable argument for the extension, modification, or reversal of existing law; it isundertaken primarily to delay or prolong the resolution of the litigation, or to harass ormaliciously injure another; or it asserts material factual statements that are false" (Mascia v Maresco, 39 AD3d504, 505 [2007]; see 22 NYCRR 130-1.1). Under the facts of this case, theCounty defendants' conduct in action No. 2 was not frivolous. Accordingly, the SupremeCourt improvidently exercised its discretion in granting that branch of the plaintiffs' crossmotion in action No. 2 which was to impose sanctions against the County defendants (see Muro-Light v Farley, 95AD3d 846, 848 [2012]).
Since these are, in part, declaratory judgment actions, the matters must be remitted tothe Supreme Court, Nassau County, for the entry of judgments, inter alia, declaring thatthe County defendants' application of Real Property Tax Law article 18 in imposingspecial ad valorem levies upon real property situated within noncountywide specialdistricts located in Nassau County during the subject tax years is illegal and void (seeLanza v Wagner, 11 NY2d 317, 334 [1962]). Mastro, J.P., Dillon, Leventhal andDuffy, JJ., concur. [Prior Case History: 2011 NY Slip Op 32800(U).]